Management control systems and real earnings management: Effects on firm performance Articles uri icon

publication date

  • June 2022

start page

  • 1

end page

  • 22

issue

  • 100781

volume

  • 55

International Standard Serial Number (ISSN)

  • 1044-5005

Electronic International Standard Serial Number (EISSN)

  • 1096-1224

abstract

  • We examine an unexplored side of management control systems (MCS): their links with real earnings management. We propose that interactive use of MCS supports management in identifying, evaluating, selecting, and implementing real actions that conceptually would be classified as real earnings management (REM). Interactive MCS use is predicted to enhance managerial REM actions that retain the focus of the organization on its strategic objectives, leading to higher future performance. We test our research model empirically with survey and archival data. The results support our predictions. Finally, we explore the role of other levers of control.

subjects

  • Business
  • Economics

keywords

  • accruals earnings management; interactive use; levers of control; management control systems; performance; real earnings management